Come across a few trains of thoughts recently, I was brought up with the view that your parents are financially responsible for you until 18-21yo then afterwards, if you want to live at home you pay board.
Some of my friends have received lump sum (circa $20k) when they turned 21, they could use it anyway they like.
Others have parents gift them the deposit they need to buy a fancy house
I don’t have kids yet but interested to hear other people’s point of view.
Freebie page only :)
I just finished reading a book about Bart Whitaker, the 23 year old who spent most of his time after turning 17 dreaming of and plotting his parents death, before actually taking out a hit on them to get all the family inheritance. His mother and brother were killed but his dad survived with just a bullet passing through his arm and chest. I think I'll just not have kids at all, seems to me that having kids just increases your statistical likelihood of being murdered over money.
Give me your address and I can help you out ;)
Wow never heard of that story, just read about it, scary stuff. Hopefully in America
i don't like any of the options, but ofc i would help my kids by a house or something. though i need a gf first so Wystri help plz
What kind of sick person would mate a child?
That child who needs a gf first. His photo looks like a 13 year old.
I’d love to buy three investment homes, one each for my kids. Housing affordability is in decline and my fear is that they’ll have no hope. That said, I’ve taken no active steps. If I can find some properties in the next year, that require little more than the rent to pay the mortgage I’ll do it. Otherwise, I’m not keen in sacrificing overseas holidays to do it. I’m also positive I won’t be guaranteeing the properties to them. I’ll need them to work hard before I gift them.
I heard of a guy who bragged he got 12 investment properties, what he meant to say he got 12 death pledges to the banks, amounting to $8 million in total of debt. All those properties are not his, its the bank's.
Don't sacrifice your holidays to pursue those overpriced properties, if the world ends in couple of weeks, you'll be glad you've spent the time you had enjoying life, not paying stupid interest rates to the fat cats in martin place.
Oh, the places I am looking at the rent pretty much covers the repayments. I’ve been fortunate to get a good education and a fantastic career. I know that a lot of it has been luck and can’t be guaranteed no matter how hard a person works so I just figure I’d rather buy the properties for my kids than drive a flash car. It’s enormosly satisfying to do something that could help them. We’ve paid off our mortgage, enjoy two overseas holidays a year and the kids go to a good school so as long as that’s not compromised I figure I might as well just do it.
Just remember, at one point in your life, things will be upside down. Maybe won't happen in your time, but could happen with your kids. The higher you rise, the harder you fall. Train yourself to let go of everything you fear to lose.
If (Rent - Maintenance + Capital Gains - GCT) < (Interest on the FULL value of the property), you're losing money.
Unless it's a unit it's probably had enough capital gains to cover the shortfall until recently, but at the moment most capitals are turning into the red. Rent doesn't cover repayments much less maintenance as well, and capital gains to make up the difference aren't eventuating anymore, so properties are now money pits. Investing in shares etc currently means making a profit now and then buying a property for more or less the same, or even slightly less in 5 years time.
Housing affordability is currently plateauing as it's begun to reach the limit that debt and no wage growth will allow. I'm not expecting prices to start increasing again until wages do.
@Bargs: So, what would you suggest? A blue chip share portfolio?
I pay a huge amount of personal tax with very few deductions, so making a loss on the property wasn’t so much of a deterrent.
I am leaving my kids the best inheritance ever their mother. If they want their inheritance early they can also have me.
I tell my parents to spend it and enjoy their remaining time on earth
I will do he same, and hand over what's left
I'm planning to be richer than my parents, I don't need their money.
That used to be the norm for the past 150 years. Unfortunately we are heading into the first period in a long time where a large percentage won't be able to achieve that.
Though I don't know you or your parents situation.
Personally I will be ok, they helped a tiny bit when I bought my house, made sense to get me over the line in a place I wouldn't have to sell in 5 years, they made like 2 million in the past 30 years from their home. Makes sense to pass on like 2% of that early to make or break the child rearing years of my life and make them more like what they expected I would achieve before housing jumped 100% in 5 years in our area.
I will likely do the same, though I'm not sure how far it would go. They have offered my siblings the same but it hasnt helped them even get an apartment yet. It was mine and my partners own means that got us there.
Now I just need to pay it off before I retire in 30 years. Cant imagine what my 4 bedroom house in a nice part of Sydney will be worth in 30 years…
I think it doesn't matter how much our houses worth in 10, 20, 50, 100 years. If we only have one house to live in, we can't sell it.
If you have 10 houses, then its an entirely different story.
Sydney housing market is overrated, those who lucky enough to buy houses in the 80s or 90s are now laughing, but only if they bought many houses, not just 1.
But still $2 million in 30 years, an average office worker can save the equivalent amount in the same duration.
There are other ways to get rich quick, at much higher risks.
Only whats left after I die unpredictably. If I knew the exact time of my death, I would try and leave this world with a $0 net worth balance
Agreed. Wealth and power should only be the property of one generation. Frankly, the entire idea of inheritance is disgusting - individuals should have to toil for their gains, and not simply be handed it due to being in a "blood lineage".
Yes. When I have kids, I plan to give the money I have to them, in small amounts, well before I die. Whats the point of saving it up just to dump it all on them at the end? Better to use it to improve their lives in small, meaningful ways.
I’d rather teach my kids to be self sufficient then hand them money without knowing how much hard work went into earning it. That means no credit cards, spending within your means and putting a percentage away for savings.
I think the problem is that parents hand their kids anything they want just to shut them up and before you know it they’re teenagers and it’s too late to change their behaviour.
Once overheard a teenage girl walking past me on the phone who said the following “Where are you? I need money!” No “please”, no “thank you”.
By the time you die, your kids will be about 60. So if they are hanging out for a leg up in the property market, they will have to slum it for a few decades.
(profanity) 'em
Don't have kids, but my parent barely stays afloat let alone building up an inheritance.
Is this thread about Asian families? Seems like it is.
I wouldn't be giving my kids 20 grand just because they become an adult.
Not about Asian families in particular but funnily enough my friend that got the $20k is Asian
I'm going to vote Yes to make everyone else feel guilty…maybe my mother…and she'll live very frugally to leave me everything. As it is if she were to die now my sister and I would be very well off. I really do hope she spends her money wisely but not too frugally. She's been living on a pension with no superannuation for years and somehow saves money, has a reasonably good car, has annual holidays, has a dog, drinks good coffee, has ice cream. I would consider those to be luxuries that many on a pension can't afford yet she does. No mortgage helps a lot. Knowing my luck she'll live to 100 and spend everything on nursing home fees…but by then I'll be 80. I won't need it then.
get Legal advice first otherwise you might be helping fund some divorce lawyers trip to aspen
My neighbour gave his son a substantial amount to purchase a farm 20 years ago but his solicitor talked him into having it as a loan with compounding interest, able to be called in at any time. When his son divorced after 15 years of marriage he called in the loan so the ex wife didn't get a cent of the farm.
Myself I will help my kids by paying for uni and letting them stay at home until they can afford a house. I also matched my sons first year savings from casual work because his work was hard and pay was pitiful - unfortunately he is a great saver and I had to give him $4500.
Exactly what I was getting at RE your neighbour
Paying for uni and education IMO is worth more then big handouts
You’re teaching them how to fish rather then giving them fish
I also borrow their savings to put into my accounts as they get so little interest- they never know if they are going to get it back. I think it teaches them a life lesson don't trust anyone enough to give them access to your money- even your mum. The big one could care less and says I can have the money to pay for the household expenses but the little one (13) does have a contract written up including interest.
Seconded university/tertiary education. Not sure I would waste money on private primary and secondary schools though.
Need to document this at time of transaction, presumption of advancement from parents to child needs to be rebutted
@maximum how does the loan work do you know? Your neighbour's parents bought the farm and then loan it out to their son?
My neighbour was the person who made the "gift" but at the time he had a loan agreement made up which compounded the interest for the amount he put into the farm. The farm was in his sons name. Using simple calculations say he "lent" him $100000 at 10% compound interest after 15 years the son owed him about $415000.
His intention was never to call in the loan but when the sons wife wanted a divorce and half the farm the loan had to be taken as a liability and left little to be included in any settlement - in fact the son walked away with some of her assets which she bought into the marriage.
darn that is so smart!!! worked out well.
My parents never could afford the 21st, deposits for the car and house and weddings so i became self reliant through necessity and was able to pay for it all. It served me well later in life as i became a single mum and finances stretched. I have done what i have needed to (changed careers)in order to make their lives better. I set up bank accounts for the kids when they were born and as money comes in i am able to put little amounts away and teach them to do the same. I have started to teach them the value of money like i was and i am sure they will both be fine. I dont see anything wrong with helping them along the way if you are able to and i dont see anything wrong if you feel they need to get there on their own either, it just depends on your lifestyle and financial circumstances.
"Enough money so that they would feel they could do anything, but not so much that they could do nothing" - Warren Buffet to Fortune magazine in 1986.
This is perfect.
I want to give my kids (probably will have two) a cheap house after they get married. I will never tell them of this intention until they are at least engaged. I want to give them the best headstart.
I suggest you wait for a while after marriage or leave it in your name, unless you want to give half of it to your future ex-son or daughter in law.
Some marriages don't last a couple of years.
Good advice !
Damn good advice. Thank you. I will do this.
@The Wololo Wombat: Actually, on second thoughts, maybe a lawyer can put in a legally binding agreement so that in worst case senario, my son/daughter will be the sole inheritor.
If you gift your kid a house after they've been married for a few years, does their partner own half of it?
I think if you can prove that you paid for all your house and that your partner contributed none then the partner can't take it off you.
I'm no lawyer though, just a random.
All I know is if anything ever happens to me and the Mrs, they don't get any lump sums from me until 25yo (maybe even 30yo).
All possessions, fine.
But any property and life insurance is to remain in trust until they become adults, with a modest pension paid to them to help them out a little (but not enough to stop them from working).
And no, 18yo is not an adult when it comes to responsible thinking when it comes to money.
They are being raised to understand the real value of money, but I can't recall a single 18yo I've met (myself included) that made good financial decisions at 18. Too excited earning a pay packet and "freedom" to understand that real financial freedom is exactly what they had as a child. Becoming an adult and paying for your life expenses is the exact opposite!
Otherwise if I'm alive and kicking when they reach the time to leave home (their choice no rush, but I would hope they use my house to save and not leave permanently too early), I'd help them along with a big deposit for their own home. But again, not until they are old enough to know what they want and not just looking for a slush fund to travel, buy cars, and blow it all needlessly.
Haha. This is Ozbargain. Many of the young members are responsible. I know I sure was. I budgeted, lived frugally and then had enough for a house deposit after 6mths of full time work at 21. Now 27 and still a stingy bastard.
I always read that people plan to pay for their kids' university education.
I never understood why due to HECS. I fully understand paying for private school, but uni?
HECS is merely debt slavery, a chain around your kids neck even before they start top earn an income (yes, I'm old enough to remember when Uni education was free). We but money aside each month when our kids were born tot hat when they left school and if they wanted to do tertiary education there would be some money to help them along. That whole generations of young people should be encumbered to government before they even start earning money is obscene to me. Also if you think these costs aren't reflected in the prices the public have to pay for professional services then you're fooling yourself. :)
HECS is the cheapest loan you can have, and accessible to everyone. It makes a lot more sense to help them buy a house, which is a lot harder to get.
6 of one, half dozen of the other….. we've taught our kids to avoid any long-term non-appreciating debt if possible. Even housing is mostly a zero-sums game for most people. Those who bought before the boom would have done alright but I don't see much room for prices to go higher for many years. There has to be a pullback in RE prices at some point so that would present an opportunity for people to enter that market if they wish to. For most people though the family home was not seen primarily as an investment, it was a HOME and if it grew in value over the years then all the better. These days, unless you are earning a GREAT wage it is simply a debt trap with a LOT of people living right on the edge, even a small interest rate rise could knock things over. Each to their own of course but I've never seen the point of being encumbered to a bank for 30-40 years with all of the stress that involves (especially once you learn that they just invent the loan money thin air and don't actually give you 'equal consideration' in terms of real value) only to have the house valued at about what you paid for including all the interest.
Anyway, as I said, each to their own so we put away money for our kids education so now they can start life debt-free, when they are older and more settled, of course we would love to help them further, but they also have their own lessons to learn in that regard so it becomes a bit of a balancing act between helping out and spoiling them. :)
HECS has no interest charged it is only indexed each year to reflect changes in the Consumer Price Index to maintain its real value.The student can earn up to $54,869pa before having to make any repayment. It makes more sense for the parent to keep the money within their investments and give the money to their child when it falls due with the added investment return as a bonus.
Thanks for the info re' interest I didn't know that. :)
Though pegging it to the CPI is kinda like interest, if the loan amount goes up a few percentage points each year and wages don't……..?
At least not as bad as america (yet) where your student loans can't even be discharged through bankruptcy….
Also worth noting http://www.abc.net.au/news/2014-05-27/is-charging-interest-o…
The real cost of the debt doesn't change, indexing the debt to inflation is different to charging interest. If, for whatever reason, we go through a period of deflation, the nominal value of the HECS debt will decrease. The nominal value will always increase if interest is charged.
HECS is the cheapest loan you will ever get and it is generally best to pay it off as slowly as possible. Put it this way, if the bank was willing to give you a loan that was only indexed to inflation, you could invest it in some safe investment and earn 3-5% return, thereby essentially getting "free" money without doing anything. Same thing with HECS. If you have $30 000 (or whatever amount) and can pay off all the HECS debt at once, you wouldn't want to do that, as you can get a higher rate of return by investing it elsewhere. Or if you have another source of debt (like a mortgage or car loan) you're better off paying that first.
@BJTorMOSFET: Good points. :)
I just hate that kind of debt where people are 'forced' to go into it in order to get an education. :) But yes, better than other kids of debt. Unless the government goes ahead with it's plans to move it to an interest system as per my link above.
My parents paid my hecs until I had a job that meant I could afford to. They then let me live at home rent free until I got married. I was always a good saver so they knew my wages were mainly going into savings.
I intend to pay my kids hecs so that when they are earning enough to buy a house they don't have a debt which will limit the amount they can borrow. I also want to encourage them to study without pressure of money issues.
My intention is that 30% of my kids inheritances is to be placed in super.
When I go on holidays I go first class all the way because if I don't the kids will
We have no kids but do have 12 nephews and nieces aged between 14 and 34.
They are all selfish, self indulgent, spoilt bastards!
We have 6 properties, the proceeds of their sale will be divided in a way that each gets a small amount.
Every year, their inheritance goes up by $1000 (currently at $9000 each)
The rest is divided among animal welfare groups here and overseas.
Life isn't all smooth sailing and you should learn to stand on your own two feet before taking the easy route - family or otherwise.
So are you giving them $9000 each every year or just at the end?
We add $1000 each year to their inheritance. Wife and I are both 50yrs. If we die at 60yrs they will get $19k each, at 70yrs, $29K each etc
Tell us what you really think of them! Lol
I'd like to help with education and housing, but unless our pollies pull their collective fingers out and fix the insane costs for both of those things they'll probably have to help themselves ¯\_(ツ)_/¯
Most politicians benefit from high house prices. Many of them own more than 3 investment properties too.
Yeah, funny how that works isn't it :-/
They wont, so vote for different ones now…it's our only hope! :)
There was a financial adviser on a talk show that advised on this.
IF you are in the situation to leave a substantial inheritance, instead start a trust and give them a regular income now. The reason: they will inherit the wealth one day, so why not give some now. It is far more useful for the kids to be financially secure in their 20s rather than their 60s when you pass away.
I am not too fussed about the inheritance but like others said would like to be able to help them when starting out to buy a house etc. Fortunately I should be in a position to do this as I have invested well (or luckily) in property before the boom.
To be honest I don't really need an inheritance now from my parents, but could really have used the help when I was younger and had and got nothing, so want to do this for my kids
My mantra would be to enjoy your wealth while you still can and don't worry too much about leaving an inheritance.
I know a family friend that is in his mid fifties with 4 x 1mil+ properties and still lives like a poor man scrimping and saving having taken no holidays or really ever enjoyed life. His kids are ungrateful and are waiting for the day their inheritance kicks in. Kind of a sad life if your only working to build wealth you will never get to enjoy.
For most of us, our kids will be thinking about buying a house in their late 20s early 30s, when we are typically in our late 50s and planning retirement. With a life expectancy of about 90, a 60yo retiree has 30 years living to finance. Think carefully …
I got nothing when i became an adult moved out when i was 17 and started renting. Abit older now have twin boys and another on the way. We save $15 a week for the twins and onther 10 for the new baby and whatever money they recieve in presents in a savings account.
their 3 at the moment but we will keep saving that much for them untill there 21 then give it to them when they need help. After that keep saving the same amount for help with their kids and family holidays.
Its a small amount to take out during the week but over the years should give them a solid boost.
I was planning to leave my kids my Ozbargain account but no one is even making jokes about buying cars as an investment anymore so why bother?
Bikies
Depends on the kids. If you gave kids a house when they got married like my grandparents did for my parents, it could set them up for life. But if they're not financially responsible, you're just facilitating poor decisions and they'd be better off inheriting later after they've squandered their life away.
I don't think an inheritance is necessary. It's likely your kids will be well established by the time you go. It'd be a nice consolation I guess, but I'd put own life first.
I've put $1000 into my daughter's super every year because the ATO gives a 50% return via gov co-contribution.
I poured 10s of 1000s into a first home buyers account when they were paying 8% + government contributions.
I'm thinking of helping her get a loan now if she's interested in a particular house sufficiently renovated to get first home buyer's grant.
Links re: co-contributions? Minimum age? Mine is three, but I'd put $1k/year in for the top up (I do it for my own NZ super too).
sorry, talking about adult children. Best thing you can do for young children's future is to get your own financial situation strong so in 15-50 years time you're in a position to help them out.
I know a few people who have bank accounts for their kids and put in a bit each pay, but they'd be better off paying off debt or investing it. But some of them would spend it if they didn't put it away, so I guess it works for them.
Child saving account gets 4.75% if you make contribution each month versus home loan that has interest rate of less than 4%. There's no tax on kids interest under the threshold, so you are best to invest in their account if you can be bothered juggling the cash
Yeah, my approach so far. I might keep my own ledger as to what I'm saving for my daughter, but it'll be going wherever gets the best returns.
@jellycent: Which account? I'll take a look. More likely to throw it in to something marginally more risky like Ratesetter, better rates, and my wife has no income so 0% tax on returns anyway.
@ely: BankWest kids' bonus saver account. Requirements are to deposit min $25 up to maximum amount of $250 per month to get the bonus interest (otherwise lousy 0.1% from memory).
Every 12 months the total balance also gets swept to a low interest account so important to move this out to a different higher interest account.
You can then set up a regular payment from the swept funds so that if you choose you can just reinvest year 1s savings (and therefore always meet min deposit requirements). Otherwise can keep it in the higher interest account and inject new savings into BankWest account depending on how generous you're feeling.
really? that's pretty good I need to look into that. Is this with a specific bank or is it pretty common??
Slick
Never leave inheritance to kids. Give it to grandkids and make sure your kids know that.
Skipping a generation promotes your kids to continue the family tradition of having a family and they are more likely to look after their kids.
I'm guessing the 3 people who downvoted this did so because they believe your grandparents are still alive, and you are advocating for yourself over your parents.
I had the same idea though, and I think it is eminently practical. I'm working on convincing my parents to do this, because I'd rather see the money go to my neices and nephews who at least have a chance of making it, even if that means I forgo my own share of a few hundred thousand.
Unfortunately, all my grandparents have passed and I let my parents handle whatever inheritance came with it.
I have many wealthy friends and those who did not make their fortune usually burn through it. Only the old rich manage to manage money well, and guess what, money skips a generation there.
I'm not old rich, heck I'm not new rich. I just seen enough people who do not even know the existence of financial education to know better.
Rich Dad, poor Dad. Read it. The author may be a crook but the message of money management holds true.
I've read it. I won't say what I thought of it, but the central message is sound
The game is pretty fun too. I played that for a while until I figured out how to win.
The fact you have no surviving granparents means that your not selfishly campaigning for yourself, and infact are campaiging for the opposite. I hope other people have the intelligence to see that, but I doubt it. Quick to hate, but forgiveness is a struggle. Their burden.
Old rich manage money well, if more money is your goal. They often forget though that money's main purpose is life, and life's improvement. Usually they end up wasting most of it on pointlessly prolonging their life past the point of purpose. Shame.. and an expensive venture.
Have you read Enders game?
@outlander:
I've listened to the audio book. Surprisingly complex theme for a book targeted at teenagers.
The issue of inheritance is always touchy. Those who are destined to be without will likely campaign against it, and those who are beneficiaries will campaign for.
In the end, I couldn't care less what people do with their money. It's not mine and if they loose it, it may benefit me. I know what works and I've put in my two cents.
Squander the inheritance or waste it all before taking a dirt nap, it's no one's business. Just don't proposition redistribution. It only hurts the middle class as the rich have trusts to mitigate inheritance tax and stamp duty. Don't shoot yourselves in the foot.
I am retired and I'm SKIing - spending my kids inheritance - yaaaaaayyyyyyyyyy!!!!!
With life expectancy now at 80 years+, your kids will probably be in their 50s/60s by the time they get an inheritance. I think its much more useful to give them a 'small' amount relative to what they would inherit (ie house deposit/capital to start a business etc) when they are in their 20s/30s. This small leg up sets them up for life.
I think the real question is how do I kick my kids out of the house, or how do I get them to pay rent?
Talk to them, explain costs, tell them they pay rent/board (cheaper than market value) or they move out and take on all the expenses with it (water, electricity, rent etc)
I don't have any kids, but by the time I'm dead I hope to have at least say….3 modest properties to pass onto them. Likely more but you never know how things pan out.
My grandma died when I was quite young (maybe 5?) and she left all her grandkids (only 4 of us) a small trust fund. The conditions on it where we couldn't touch it until we were 25 except for education purposes. It accrued a lot of interest over the years but was still just 10k (in part due to it being mismanaged and no attached TFN meaning I missed out on half the interest for years and by the time I understood that it was too late to do anything about)
May I suggest to those thinking of leaving money - 25 is a great age to inherit money. For me it went into paying for my wedding. At 18 I was still frugal but I feel it would have likely been frittered away on not so worthy items.
For me it went into paying for my wedding.
So it was "frittered away on (something) not so worthy" anyway :p
Be nothing left the way my money is spent thanks to this website.